India Among Asia’s Cheapest, Time to Buy?

By Ben Levisohn

Yes, says Credit Suisse.

Sajjad Hussain/Agence France-Presse/Getty Images

In a note to investors released yesterday, Credit Suisse’s Sakthi Siva and Kin Nang Chik point out that India is now among Asia’s four cheapest markets using MSCI indexes. And when India is cheap, good things usually happen.

Since 2002, India has been among the cheapest Asian markets 14 times, not including the recent dip. And in all but one, it has outperformed the MSCI Asia ex-Japan index during the next 12 months. The average outperformance: 13 percentage points. The one time it didn’t best the MSCI Asia ex-Japan index was in December 2003, when it lagged by 2.1 percentage points.

Credit Suisse was kind enough to offer its favorite Indian stocks, as well. They include Sterlite Industries (SLT), Wipro (WIT) and Tata Motors (TTM).

There’s no doubt investors, including yours truly, have been a bit bearish on India recently–especially following the release of the budget last week. The iShares MSCI Inida Index (INDA) exchange-traded fund has dropped 4.7% this year, according to Morningstar, more than twice as much as the iShares MSCI Emerging Markets Index ETF’s (EEM) 2.1% drop. The iShares MSCI All Country Asia ex Japan Index ETF (AAXJ) has dropped just 0.6% this year.

About Emerging Markets Daily

Emerging markets have been synonymous with growth, but the outlook for individual nations is constantly changing. Countries from Brazil and Russia to Turkey face challenges including infrastructure bottlenecks, credit issues and political shifts. The Barrons.com Emerging Markets Daily blog analyzes news, data and research out of emerging markets beyond Asia to help readers navigate the investment landscape.

Barron’s veteran Dimitra DeFotis has been blogging about emerging market investing since traveling to India and Turkey. Based in New York, she previously wrote for Barron’s about U.S. equity investing, including cover stories and roundtables on energy themes. Dimitra was among the first digital journalists at the Chicago Tribune and started her career as a police reporter at the Daily Herald in the Chicago suburbs. Dimitra holds degrees from the University of Illinois and Columbia University, where she was a Knight-Bagehot Fellow in the business and journalism schools.